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Fed Stress Test Released: Citi, SunTrust, Ally And MetLife Have Insufficient Capital
When we announced the news of Jamie Dimon's surprising announcement, we said that "Since we are now obviously replaying the entire credit crisis, from beginning to end, must as well go all in. Now - who's next? And perhaps just as importantly, who isn't." Who isn't it turns out are 4 banks that did not pass the Fed's stress test results. These are SunTrust, naturally Ally, MetLife and... Citi. Way to earn that 2011 $15 million comp Vic! To summarize: across the 19 banks taking the test, the maximum losses are projected to hit a total of $534 billion. But at least Jamie Dimon gets to pay his dividend. Also, the European LTRO stigma comes to the US in the form of banks who do dividend hike/buyback, vs those that do not.. and of course the 4 unlucky ones that fail the stress test entirely.
Banks at or below 5% are ooopsie.
From the Fed:
The results of the stress scenario projections suggest that the 19 BHCs as a group would experience significant losses under the assumptions of the Supervisory Stress Scenario. Losses at the 19 BHCs are projected to total $534 billion over the nine quarters of the scenario, including losses across the loan portfolios, trading and counterparty credit losses from the global financial market shock, and losses on securities held in the BHCs’ investment portfolios. Losses related to operational risk events such as fraud, computer systems failure, and employee lawsuits, and losses related to mortgage repurchases, which are included in pre-provision net revenue (PPNR), add another $115 billion to this total. Projected PPNR at the 19 BHCs is $294 billion over the nine quarters of the scenario. Together, the high projected losses and low projected PPNR result in projected net income before taxes of $222 billion for the 19 BHCs. This is an extremely low level of net income relative to historical experience in the U.S. banking industry, even in periods of considerable economic and financial market stress.
Despite sometimes significant projected decreases, most of the BHCs maintain stressed regulatory capital ratios including all planned capital distributions above regulatory minimum levels over the course of the stress scenario horizon.24 Overall, 4 of the 19 BHCs have one or more projected regulatory capital ratios (including capital distributions) that fall below regulatory minimum levels at some point over the stress scenario horizon, including 3 BHCs with a stressed ratio of tier 1 common ratio below the 5 percent benchmark established in the capital plans rule. In interpreting these results, it is important to recall that the Federal Reserve’s stress scenario projections are deliberately stringent and conservative assessments under hypothetical, adverse economic conditions and the results are not forecasts or the most likely outcomes for these BHCs.
The minimum levels for BHCs to be considered adequately capitalized are 4 percent for the tier 1 ratio, 8 percent for the total capital ratio, and 3 or 4 percent for the tier 1 leverage ratio. Based on the U.S. capital adequacy guidelines, the tier 1 leverage minimum is 3 percent for BHCs with a composite BOPEC rating of "1" and for BHCs that have implemented the Board’s risk-based capital measure for market risk. The tier 1 leverage minimum is 4 percent for all other BHCs. The tier 1 leverage ratio minimum is 4 percent for Ally Financial Inc., American Express Company, Capital One Financial Corporation, and MetLife, Inc., and 3 percent for the rest of the 19 BHCs participating in CCAR 2012. The capital plans rule further stipulates that the BHCs must demonstrate their ability to maintain tier 1 common ratios above 5 percent.
This is what the economic conditions were in the worst case:
So... Buy the dip?
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She loves stress tests- http://hedge.ly/gFWVSm
LMFAO.
There will be a run on Citi, ala Lehman 2008, requiring hundreds of billions of more BernankBux recapitalization of that notorious black hole of capital, and Hank Paulson will come out of comfortable retirement and start making the rounds as a guest on CN(BS)C and Bloomturd warning of martial law & tanks in the street if the 2012 Taxpayer CORNHOLE-II Act isn't passed in the next 24 hours.
We'll find out that AIG has been dabbling in massive numbers of CDS contracts again, only this time on PIIGS sovereign debt.
Good times.
Hundreds of billion more BernankBux? Mere chicken scratch at this point.
yawn if 4 money center banks failed tier one and no one cared......
i wanna see steve leisman and maria bart explode on live tee vee and sorkin getting ass reamed for a bonus by becky quick with a dildo as buffect sucks his tiny lil dick and jim cramer does backflips
and the spy is going up up up lol
phew...thanks to the stress test results, the "uncertainty" has been taken out of the markets..............................you may now commence with new dow highs.......................
cramer just jizzed on his keyboard
Q2 is gonna be EPIC.... in a bearish way.
http://stockcharts.com/h-sc/ui?s=$SPX:$VIX&p=W&b=5&g=0&id=p97370419357
party on!
SunTrust should be okay. I just wired a few thousand bucks to Gainesville Coins via SunTrust. They can now fractional reserve the fuck out of that and create kazillion dollars I'm sure.
Get out while you still can I always say.
Shit, am I confused or what. I thought Bennie said a while back in front of Congress that revealing which banks got Fed loans would unfairly jeopardize their financial positions - you know could cause them bank runs. Now all of a sudden we got Feddy stress checks that throw these suckers under the same sort of Greydog Special.
Am I just making a mountain out of a herpes sore?
*Wait, I just thought of something. You don't think Jamie came out early with the all BofA clear siren 'cause he's "banking" on lets say a Citi getting handed over to him for nuthin' do ya? I mean, help me out here.
How sad is it when BAC & C can't even beat the goal-seeked, uber lower threshold "stress tests" that The Bernank designed for them, in consultation with them (i.e. under their directives)?
These stress tests are the health care equivalent of having an obese, artery-clogged person walk on a treadmill at a moderate pace for 1.913 seconds.
And yet... "Citigroup rose 6.3 per cent before the market close, but fell 4 per cent after hours as it became clear the bank had failed." Goes up 6.3 percent on [false] hopes it passed, then drops only 4 percent on proof it failed the 1.913 second test. In other words, it went up net on bad news. That's the market in a nutshell.
Oh thank God my jpm bank is well capitalized. I'm up 7% today. Woo hoo,,, /sarcasm
yes. metlife is in big trouble at 5.1 but jpm is golden at 5.4 because this stress test is like particle physics: heisenberg is the only uncertainty.
"How sad is it when BAC & C can't even beat the goal-seeked, uber lower threshold "stress tests" that The Bernank designed for them, in consultation with them (i.e. under their directives)?"
Snatched my thoughts right out of my head.
What a farce.
SunTrust is TOAST ,, whatever they show on their books as assetts is trash ,, they wrote mortgages all through the boom using MERS standard language naming MERS as the owner of the loans ... they didn't offload most of their loans ,, held many of them ... and they're all uncollectible.
I guess Pavlov's dogs are so conditioned now that no matter what the news, they just drool all over the place.
I pray one day soon all these people are somehow brought down in spectacular fashion. The Dutch shaved the heads of the women sellouts, shot the sellout men. To good for any of these traitors.
That's quite the image there. Maybe I'd tune in. Maybe.
Yep. The "devils we all know" are picking the winners and losers again. Place your bets.
@ LawsofPhysics, my bet is I'm going long on Ammo.
Yeah if one of those four goes down, all the other stress tests are moot because it looks like they didnt stress test counterparty risk in those scenarios. I dont have time to read now but it seems like "If all hell breaks loose and magically everyone else gets through, we will get through to due to said magic."
Looks expensive. I have insufficient capital for that. Maybe I should talk to the Fed about a loan.
No well in hell the stock market craps 50% and the banks are fine. We just had a 2% down day a few days ago (which feels like eons ago actually) and we already chatting up the next QE..
Banks on QE as represented with a Blazing Saddles clip - http://www.youtube.com/watch?v=Z_JOGmXpe5I
Translation:
Snoopy Sucks.
Ally needs more taxpayer dollars.
Citi wasted all their taxpayer dollars.
STI is a GS acquisition target.
Media circus is now over.
Please return to your mind numbed ignorance of reality and buy more AAPL.
"Ally needs more taxpayer dollars."
Ally has been Sub-prime loaning to 450 credit score CREDIT CRIMINALS for months, on new GM Cars to boost Obama's sagging economic output numbers for the election.
WHODATHUNK it might be 'Stressful' to the banks bottom line?
But then again, what's a few hundred billion more taxpayer bucks, compared to THE GLORY OF A REELECTED OBAMA?
Psstttt....we already OWN most of ALLY. Just sayin'....
Bank of Countrywide Merrill Lynch passed?!?! Fucking total hot stinking dogshit!
Fantastic William...as usual.
Yet Gold plummets!? How does this nonsense make any sense. Unless it is complete and blatant manipulation. I think we all know that it is.
http://goldisking.blogspot.com/
Perhaps manipulation, perhaps not. The Euro is sinking fast and money is going into the "safe haven" of $. Should see that coming! Stay in cash until gold turns around, then buy PMs.
hey Vikram, why they always picking on the Indians
Fail? That can't be. All are insolvent in a real world, but we are not in that space.
No, you and I are in that space. The banks are in an alternate universe.
Ponzi man do what ponzi can.
This is the only place to get actual news.
All the idiots on CNBC and Bloomberg are falling all over themselves trying to make the best of this. Maybe they can just get together and blow each other.
OFF CAMERA!
"...they can just get together and blow each other[, OFF CAMERA]."
Whoa, that was close. Be careful Zippy.
5 yrs of this shit non-stop.......
...and "stress test" is just another codeword for "gimme a bailout!"
funny i dont remember stress test results during the boom years........you would think, since the recession is behind us, and we are in a period of growth (organic of course), and consumers are spending again, and jobs are as plentiful as lollipops (poisoned) at bank teller windows, shirley there should be no reason to publicize large bank stress tests...........
LOL good point
...and stop calling me Surely!
Don't get surly, Shirley.
It's the new communism,, enjoy it.
True. After the first round of bailouts I remember CEOs having to return bonus money and such. No longer, it's the new normal. In fact, shouldn't the shareholders be up in arms if they DON'T see some failing of stress tests? There is not enough "profit" taking if you don't fail your stress test! That's leaving taxpayer money on the table!
In fact, can I sign up my small business for a Fed Stress Test (tm)? I think I may fail.
Yup, maybe 5 more of this and bankers are going to start getting a bad reputation.
This should be bullish, as these four will be getting fat bailouts before the weekend that they will apply to purchases of stocks.
Ramp it, beotchez!
If C is green tomorrow Im quitting.
itll close green triple digit gain $540 billion is piss
Is that a whisper of future bail-outs in the air?
Bank of America is ok? Riiight....
In the land of idiots, they are the least idiotic
Of course Bank of America is okay. they have to take care of our favorite old kleptocrate, and watch uncle Warren's back.
Very well capitalized it seems. Plus, you have to remember they are adequately hedged through appropriate financial vehicles written by other well capitalized banks who are also hedged in a similar manner. No worries at all.
/sarc
SURE THEY ARE! They have paid the proper amount of protection money... err... 'Donations' to Obama and the Democrat Party!
You'll note how GOLDMAN scored the same as SunTrust, but somehow passes the "Extra Stress" part of the exam?
I'm fucking sick of it.
Upon further inspection, many are in the 5s, meaning, many just squeeked by, like JPM.
If I'm reading this right.
Shhh. You're not supposed to read the details!
The underwater basket weaving course I took at the University of Phoenix for my Masters I elected to take PASS/FAIL...
SURPRISE!!!!
Can't citi just flip their credit card debt into loans?
Numbers would so much different and they could still repackage it and sell it to other morons.
WFC just increased their dividend also. Who's next? GS?
ALL OF THEM BABY!!!! ALL OF THEM!!!
It's a fucking awesome!
Only 13 trading days til quarter's end and Booyah Bonuses....
Wow. It's almost like someone suggested that they all increase their dividend. Whom might that be?
In other news, Apple failed the "if iPads become inedible" stress test. However, at this time there is no reason to mark iPads to edibility.
CNBC literally spraying jizz all over the cameras now.
Dude, take a step back and look at this fucking flea circus. What a fucking laughable joke.
Sovereign Default = Bullish.
Soak it in...
The day that the US Dollar defaults will probably result in at least +500 on the DOW.
I cant believe you actually watch CNBC...why enable that bullshit outfit?
CNBC can cause brain damage.
keep watching cnbc and you will need a stress test...........
Not too many places around to get the truth. At least here you have the facts. Does not mean the road ahead will not have twists and turns to throw us off but at least you can make a rational decision based on Fact. And if you decide to chase AAPL, NFLX, C, or AMZN after reading Zero Hedge, well that is fine, at least you are making the decision knowing what is real.
Tyler
Would any of your resources have any information on whether there was an unusual jump in purchases of financial equities prior to Jamie Dimon's FTF announcement?
barliman
Shiti didn't pass??!!! Shocked! Shocked I am!
After all the fluffers on the boobs-tube were pumping up the Big C, saying it'll go semi-parabolic?
Pump and dump is the name of the game, they're just not going to be satisfied until all the "money on the sidelines" has entered, been desegregated, hyper-rehypothecated, subordinated and vaporized....
At least Credit-Anstalt passed the stress test. Now everything will be fine.
Oh! They dont have sufficiant capital? Well then get busy and print some up for them!
why bother to print some up? the promise is always there..............
I see BNYMellon is in the 13s.
So it passed with flying colors.
LOLOF'nL!
go jamie fuck up your competition so we can adjust our battered short pos after JPM crazy meltup.
i love it when wall street starts to feed off it's self. cue rating agency bank downgrades and...volatilty. jmp used the market/fed to strengthen it's position. what a world we live in.
looks like proof that GM Bank is the worst in the country by far
For some reason I remember sitting at a computer on a summerish day in 2008, with SPY at 128. This was before "anything" had "happened" [edit: well, sort of]. Now, SPY is at 140 and that's with financial underperformance weighing it down significantly. Clearly corporations are better off now, because, umm... er... they've bought government? They are cannibalizing everything including themselves for the bottom line? Because Apple and/or central banks will LBO the entire market if necessary? Hmm...
What was the national deficit run rate vs today? What was the size of the Fed balance sheet? Therein lies your answer.
OT. Recycled Stooges: http://www.politico.com/news/stories/0312/73946.html
And no.. It's not "All Good" I found this out the hard way today.
Buy the rumor, buy the news, buy buy buy.
Met Life is a bank? Since when?
Since the year 2000 Anno Domini
GE suddenly became a bank around 2008. That was just before they received TARP, and around that time Jeffy became a manager of the NY FED.
this is with UE at 13% (which means 20%+ in reality), housing another 21% down, and equities off 50%?!! you've got to be kidding. do their models include every bank getting a free trillion from the Fed?
Theyre testing for 6,500 on the DOW? Gee, I wonder why THAT is!
Yes, the assumption is no counter party risk and no money center bank failures. Thus, in the real thing the Fed is signalling they will cover all counter party risk and bank obligations. I mean we all knew it was going to anyway but this is just more confirmation.
Taxpayers weep, savers weep. Moral hazard, no such thing.
Pity the Fed. These melt-ups on bad news are such clear attempts to prove their power over markets.
They hope that next time, they ALL they will have to do is jawbone, and not intervene. With 0% rates and QE on everyone's lips, that does not seem to have worked in quite some time.
Feels like maybe todays manic market meltup at the last minute was for padding? I wouldnt be surprised by some sudden bad news for a few days. At this point way more money on the downside for these criminal bankers.
only fitting met fails as they are selling the business to GE capital.
http://online.wsj.com/article/SB1000142405297020347910457712432260723992...
Market screams higher AO. Unfukkingbelievable.
Yep, looks like only 2 or 3 more trading days until all equity markets blow past their all-time previous full retard highs.
Never go full retard. Never!
I wonder how much "capital" BofA absorbed from the Fed right before the stress test to eke out this WIN.
Based on this I should follow the advice of those commercials and open an Ally account, HAHAHAH.
I can't wait for a year from now when all the non-performing channel stuffed car loans come in.
Don't think that this will dent Pandit's $53 mill payday, no?
looks like bernank is putting citi on sale, maybe JPM can buy cheapo and continue doing god's work. didnt dexia pass stress tests? fuck it, gonna buy more aapl
well hell, let's just get them some more capital! where's my 'easy' button?
Don't I hear Nero playing?
Aren't they ALL under capitalised if they don't have $1 asset for $1 liability backing?
Fractional banking system
Why are they 'testing' those shitty economic factors, if theyre not expecting them? 50% collapse in stocks, 20% further R/E decline, and 20% unemployment?
Those are expectations for next year after obama's win in november.
Makes no sense at all. Why do all this, to make ObaMao look good, only to then fail? That would only make sense to me if theyre planning to hand over the puppet presidency reigns to some white republican, then everybody could rage with anger at him while ObaMao sits in 'perfectly awesome best-ever president' status.
Nah, makes no sense to make ObaMao look good, then have him fall on his sword at all.
eggsacly...there will be more than 4 dead bank bodies if any of that shit goes down...for sure !
"Capitalize" on PMs right here.
Those " Met Life" commercials have really payed off. I hear the Afflack Duck is for hire.
Why don't these under capitalized banks just buy some aapl?
citi and ally aren't very big or important besides its priced in!
How is Warren dealing with " Geico's" , NET JETS? Those pesky ( crude futures)?
We can take down the bankers in a period of weeks if we want to. It is pretty easy. Stop using the big 6 banks. Tell all your friends and family to stop using them. Tell everybody you encounter on the street to stop using them. If only 20% of the population who banks with these guys changes their accounts, Dimon and these other crooks would be shitting their pants in a matter of weeks. The most powerful vote we have is not at the polling booth but in our pocketbook.
Well I was saying to do all that back in '08, everyone told me thats all ridiculous and the FED and ObaMao's got this shit and will fix it.
My dear these banks only care about the upper 10% of the population.
And those people ain't going to stop banking with the big six.
The best you can hope for is an online social media campaign about some bullshit checking fee.
Quit worrying about the BIG BANKS.
Start figuring out how you are going to get EQUITY in your life.
I guess you're forgetting the bank runs of 2008... before the FDIC made its announcement that it would increase the level of its guaranteed accounts... this was in response to a giant sucking sound from all small and regional banks into the too big to fail banks, once the latter had been designated as too big to fail. The same premise exists and it is exactly why the same have done nothing but try and INCREASE their systemic risk. Sadly, the same thing is going to happen... funds go up the chain of command, right into the hands of nationalization. Good game if you can get it. [hint: they're trying to do this except more drawn out over time... too bad the time it will take to complete the task is longer than reality will grant].
Ally Financial is majority owned by US government.
Ally Financial also made a massive push into SUBPRIME AUTO LOANS this time last year.
From Reuters May 31, 2011
http://www.reuters.com/article/2011/05/31/us-allyfinancial-idUSTRE74U4FY20110531
The company is making more loans to subprime borrowers, and financing more
purchases of used cars, both steps with higher risk. It has said it wants to
raise the percentage of auto loans on used cars that it makes to 50 percent from
its current 20 percent.
Subprime car lending is "a very attractive business today," Ally President
William Muir told analysts on May 3. Profit margins on the loans more than cover
the cost of expected losses from borrowers who fail to repay, he said. Plus,
providing loans on used cars endears the company to dealers.
From the most recent Ally Financial conference call:
Ally Financial Inc., which provides financing to General Motors Co. and Chrysler
Group LLC dealers and customers, has seen "crazy, irrational competition" in the
"super prime end of the marketplace," which is one reason why more banks are
targeting the lower end of the market, said Michael Carpenter, chief executive
of the Detroit-based lender, during an earnings conference call this month.
While the average credit score for borrowers receiving new and used loans
fell six points and nine points, respectively, payment performance improved
during the quarter, Experian said.
Yes, THIS TIME IS DIFFERENT.
The fact that you are quoting " Reuters" , on Z/H is some what suspect. Zero Hedge is light years ahead of ( LIBERAL RTfeeds).
However, your arguement is worth merritt.
There's good money to be made when it comes to usury and poor people. Try running some analysis on a pay day loan business, or a rent to own furniture/appliance store, or a buy here / pay here used car lot. Scum of the earth...of course they all claim to be helping the underprivileged obtain the finer things our society has to offer, when in fact they're ass raping them dry...like I said, good money / scum of the earth.
The FED has created a shark tank... I'm not sure what job prospects are out there that don't play on wage arbitrage, collecting interest on unwitting persons, sucking the government tit, or other methods of fraud or subterfuge, but I'd sure like to hear them.
(crickets)
Bought a used truck off a guy who related the story of his buddy who also tried to buy a used truck (much like the one I'd bought)...a 10+year old beater w/some useful life still in her. He couldn't qualify for a loan for the beater (about $4K) even though he was putting 20% down and a 3 year note was easily supported on his income. But the collateral I guess was "suspect."
Curiously, he did qualify for a 72 month low-rate loan from Ally on a new Chevy Silverado, list $36K. He managed to make 5 or 6 payments and then not too longer after, the repo man came calling. Lost his credit, lost his truck, and his self-respect for being such a dope. Could have probably saved the 5 or 6 pmts and been most of the way toward the beater. But man, shiny chrome sure do look purdy.
23 trillion in bailouts and 5 years and we still are talking about zombie banks. This is 2008 all over again.
$23 trillion at least, probably double that under the table.
And yea, we're talking about zombie banks again, however now thats 'good news'.
LOL, someone stop this stupid ride I want off.
Haven't heard shadow banking mentioned in a while
I'm impressed at all the planning that's gone into this scheme, and especially impressed today.
"Scheme, I meant no scheme, I merely posed a little, academic accounting theory."Those GDP projections look almost as good as Greece's.
Oh, and in terms of capital requirements, does the Fed practice as it preaches (hmm, leverage at over 53 to 1, doesn't feel like it)?
DavidC
S&P at 1800 here we come!
Well, everyone can have fun betting on that, I'm not.
Q: So when will the public begin to care about how much $$$ the government has lost on Ally?
A: They never will.
Another victory for The Central Planners known as The Obamanation and The Bernak
No one will care until one morning everyone is looking at that DOW 6,500 the FED is stress testing the banks for. And I'll be laughing, bet on that.
Basel's opium dens just went limit-down,... bastards!
Reminds me of this:
http://www.zerohedge.com/article/belgiums-dexia-about-be-first-greek-cas...
The worst case assumptions are far more telling then the test itself. I couldn't care less what the Fed says the banks can withstand - they are likely lying anyway. Even the worst case predicts GDP back up to 4% by 2014 (I'm assuming forever at that point), with an unemployment rate of around 11%, and housing just bouncing off the bottom? Growth forever baby - and they don't even have to explain how! The inevitability of the exponential function to trend towards infinity does not apply to economics apparently.
Its the stress test parameters Im looking at, thats the real story. GDP is just bullshit, the 20% further R/E decline and equities 50% down is the tell here, thats where its all going soon.
My guess is those conditions are what the Fed expects when they hike rates sometime after 2014.
Dimon you arrogant fuck. Citi at 4.9, JPM at 5.4. Who gives a shit. It's only because you WILL be bailed out by the FED that it makes any difference.
I've still got a red hot poker ready to ram up your arse as soon as I finally meet you. You Prick.
I can't believe Citi "has insufficient funds"...WTF ...I just read some financial MSM this morning before I left that said "don't be surprised if Citi comes out smelling like a rose"....
WTF?!
Unfortunately the stench of horse shit growing the rose is somewhat overwhelming.
Dressed for the stress.....rigged with fake numbers and sponsored by yr friendly neighborhood federal reserve!.....really....what's next, the fed going around the country promoting their do-gooder message to the 8th to 12th graders....lollllll
You know their shit must be bad when you realize that BAC must have passed the test
market close end of Dec: 1258 This quarter it is up 11%!. Against a global backdrop that has hardly been rosey, 11% up! Wow, just wow
rememberr the Dexia
Imperialism and loansharking are perfectly identified ...identified, exactly as imperialism used to be identified with war conflicts. This is why we believe that the consequences of some “mistakes” easily reveal the “motives” of those who planned them.
In reality, there is a permanent “recycling” of the same tactics that lead to the mistake and then to disaster. The method used in the case of Greece is a version of the practice that started from the imperialistic centers to expand all over the world. Simply, in Greece, that is a “terminal”, banking illegal superprofits were produced so that loan sharks “spoil” the Greek public assets, while at the “center” of the planning banking superprofits were created so that loan sharks “spoil” the "Greeces”. Exactly the same illegal things were planned to bring profit to their loan sharking inspirators ...illegal profits.
More info about Global Debt Crisis here:
http://eamb-ydrohoos.blogspot.com/2012/01/global-debt-crisis.html
.
Executive bonuses have first claim on financial company assets, followed by large, politically connected creditors, followed by smaller creditors.
And last, but also least, come depositors and clients.
sti needs a new owner